A Hill of Beans?

Starbucks' effort to improve labor practices on Latin American coffee farms seems to have fizzled.

So reads a ghoulish magazine ad from the gourmet coffee company Equal Exchange, which buys only from certified co-ops.

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While Equal Exchange says it has insulated itself from complicity, the nation's leading gourmet coffee company, Starbucks, can as yet claim no such innocence. In fact, four years after acknowledging the problem and promising to address it, Starbucks seems to have made remarkably little progress.

In 1994, the Rev. John Boonstra, head of the Washington Association of Churches, wrote to Starbucks CEO Howard Schultz, asking him to do something about the miserable working conditions on Latin American coffee farms.

The company initially brushed off Boonstra, but several months later, after a Guatemalan advocacy group organized a day of leafleting, Starbucks announced that it would try to do what the protesters sought. At the company's annual meeting in February 1995, Schultz announced that the company would move to establish a "code of conduct" for its coffee suppliers, though he added, "we need more time to study the issue."

The company received national attention for its declaration, and human-rights activists expressed the hope that Starbucks would spur a new movement by multinational corporations to take responsibility for working conditions in the developing world's agricultural fields, which can be even more lawless and exploitative than the sweatshops of the manufacturing sector.

Several years later, however, any hope that the company would help to bring about fundamental change to the harsh coffee-growing business looks highly naive. While Starbucks seems to have taken just enough steps to keep protesters at bay, the company does not appear to have any intention of establishing a code of conduct, or of limiting its coffee buying to suppliers that meet some kind of standard for labor practices.

"We would like to give [farmers] the support they need to make changes," says Starbucks' chief coffee buyer, Mary Williams, "but it's their country and their business, not ours. For an American to go into any country and start telling them how to do business is a sure way to fail."

Several aspects of Starbucks' plans appear to be in a state of limbo or abandonment. The company said last year it would explore the idea of buying from "fair trade cooperatives," which are certified co-ops that share more of their income with laborers. But Williams said no such consideration is now being given.

A long-awaited study of coffee-farm conditions in Guatemala, which the company has insisted it needs to complete in order to guide its efforts, was supposed to get started last year but is now on hold. "There are methodology problems, and I don't know how those are going to get resolved or when," says Laird Harris, a local public affairs consultant working for Starbucks.

Nor has Starbucks served to inspire a rush of other companies to make pledges of corporate responsibility in agriculture. (This in contrast to the apparel industry, where codes of conduct are very much in fashion.) While Starbucks last year signed a major alliance with Kraft—maker of Maxwell House, and the second-biggest packaged-foods company in the world—Williams says there have been no discussions with the food giant about making any initiatives similar to Starbucks'.

In Guatemala, despite the recent end of the decades-long civil war, working conditions on coffee plantations (or fincas) remain grim, according to Steve Coats of the US/Guatemala Labor Education Project in Chicago, who has been the point man for the movement pressuring Starbucks. The land remains largely in the hands of a small elite class, "who are conservative, if not reactionary," says Coats. "The coffee sector is the hardest-right faction in Guatemala." For the migrant coffee pickers, most of whom are indigenous Mayans, the minimum wage of about $2.50 a day is often ignored, Coats says. There is little access to health care or education on the fincas, where children routinely work, and attempts to unionize or agitate for higher wages are often met with threats, intimidation, or worse.

Mary Williams of Starbucks disputes the idea that child labor is a big problem on the fincas. "I grew up with a lot of 10-year-old kids who worked on their family farms and no one thought that was a terrible thing," she says. "Migrant workers take their kids into the fields with them. That's the culture and tradition of those countries, and we should respect that." She also points out, "There are laws in these countries about minimum wage that we cannot enforce."

Nonetheless, Williams says that Starbucks has tried "to position ourselves as a company concerned about quality of life." The company has sought to find finca owners "who are interested in participating with us in either health or education programs at the farm level." But the company appears to have had very few takers. It has received proposals from a handful of farms to start providing on-site medical care or build schools. The company will help to pay for those projects if they go ahead, but there is no time line. "Now we have to wait and let them get started," Williams says.

Starbucks is helping support a number of other charitable/development projects that assist coffee-growing regions in Latin America. It donates books to a local milling company in Costa Rica, for example. It has helped pay for two small coffee mills in Guatemala, which allow several hundred small coffee farmers to sell their product at a higher mark-up. And the company has donated more than a million dollars to the international charity CARE over the last decade, including a recent $100,000 gift to assist victims of Hurricane Mitch.

But Steve Coats argues that charitable works are not what a code is about. "For us, the whole premise of the Starbucks code is they will attempt to buy from plantations that meet minimal standards. You can build a schoolhouse, but if workers are being paid subminimum wage and being forced to work seven days a week, then building that schoolhouse isn't exactly holding that plantation owner to acceptable standards." (Though he acknowledges that the children are better off with the schoolhouse than without—"assuming they go.") Coats also worries that there is no system in place to monitor conditions on the farms where Starbucks is offering its subsidy. "If the same plantation where you built a new schoolhouse they just shot somebody for trying to organize the workers, we wouldn't know that and neither would they." Still, Coats acknowledges that "there's not an easy way" for Starbucks to impose the kind of standards he would like to see applied on the fincas. "Starbucks needs their coffee more than Guatemala needs Starbucks," he concedes.

Starbucks' first priority, after all, is to secure a steady supply of the gourmet beans that are its lifeblood, and for which it may be in competition with other roasters. So the company can ill afford to go alienating its Latin American suppliers with righteous demands. And since the company generally buys from brokers rather than directly from farmers, it has little direct leverage.

The company has to be especially cautious in an extraordinarily volatile country like Guatemala, where decades of civil war and battles over control of the land "haven't left much room for anyone in the middle," as Coats puts it.

Dennis Smith, who works for the Presbyterian church in Guatemala and has started a Commission for the Verification of Corporate Codes of Conduct, says, "There is still a high level of militarization in the rural areas. People have become accustomed to resolving conflicts through violence."

Smith says that overtures from Starbucks are unlikely to be welcomed in the coffee sector, which has tended to be "highly nationalistic and somewhat suspicious of foreign agendas related to workers' rights and human rights."

Even with its rather benign schoolhouse projects, Starbucks has had to tread carefully, says Mary Williams: "We have to be clear that our only agenda is to give back to the countries where we're buying our coffee."

Asked about the future of the company's code of conduct effort, Williams said there were no particular plans or goals apart from building the projects that have already been announced. "We need to remain extremely realistic," she says.

While no doubt Starbucks customers would love to be reassured that there is no "blood in their coffee," for now the company shows no sign of being able to fundamentally alter an economy of exploitation that we all benefit from.